adelaide south australia 5000 adelaide south australia 5001 for ... · 04-12-2013 · in 2h 2014 !...

Santos Ltd ABN 80 007 550 923 Ground Floor, Santos Centre 60 Flinders Street Adelaide South Australia 5000

GPO Box 2455 Adelaide South Australia 5001

Direct: + 61 8 8116 5000 Facsimile: + 61 8 8116 6723 TO: ASX Market Announcements ASX Limited FROM: Company Secretary DATE: 4 December 2013 SUBJECT: Santos 2013 Investor Seminar Please find attached the Santos 2013 Investor Seminar Presentation. David Lim Company Secretary

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2013 Investor Seminar

4 December 2013

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Disclaimer and important notice

This presentation contains forward looking statements that are subject to risk factors associated with the oil and gas industry. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a range of variables which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, geotechnical factors, drilling and production results, gas commercialisation, development progress, operating results, engineering estimates, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial markets conditions in various countries, approvals and cost estimates.

All references to dollars, cents or $ in this document are to Australian currency, unless otherwise stated. All references to project completion percentages are on a value of work done basis, unless otherwise stated.

2013 INVESTOR SEMINAR 2 |

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Welcome and introduction

David Knox Managing Director and Chief Executive Officer

Unloading GLNG piperack modules, Curtis Island

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Delivering the strategy in 2013

Strong LNG project delivery in 2013 positions Santos to achieve 80 to 90 mmboe of production by 2020


! Fletcher Finucane first oil ahead of schedule and under budget

! Santos uniquely positioned to meet higher gas demand

! Exploration success

! Record sales revenue

! PNG LNG >90% complete and on track for first LNG in 2H 2014

! GLNG 72% complete and on track for first LNG in 2015

! Capital cost estimates unchanged

! Dua and Peluang on track for first production by mid-2014

! Acquisition of 50% interest in Ande Ande Lumut completed

! Farm-in to exploration licences in PNG Foreland

! Multiple options for PNG LNG expansion

ASIA LNG AUSTRALIA

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Strong GLNG project delivery in 2013

GLNG is 72% complete and on track for first LNG in 2015


GLNG plant site, Curtis Island

! Drilling ahead of plan

! Fairview wells continue to produce strongly

! Roma pilot well data supporting predicted capacity

! First new wells at Fairview and Roma connected and dewatering

! Collaboration deals signed with QGC and APLNG

! Pipeline making excellent progress

! Marine crossing tunnel ahead of schedule

! Strong progress on Curtis Island

! On track for 2015 start-up

! Capital cost estimate unchanged For

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Production guidance

2014 production 52-57 mmboe, growth driven by PNG LNG start-up.

2013 production now expected to be approximately 51 mmboe


Production

40

42

44

46

48

50

52

54

56

58

60

2011 2012 2013F 2014F

mmboe

47.1

52.1 ~51

52-57

2014 guidance 52-57 mmboe

! New projects on line

─  PNG LNG 2H 2014

─  Peluang 1H 2014

─  Dua mid-2014

! Major scheduled maintenance outages

─  35-40 day Bayu Undan/DLNG shutdown Q3 2014

─  Cooper gas planned downtime to prepare plant for 2015 demand

! Forecast lower CITIC nominations

2013 production now expected to be approximately 51 mmboe

! Chim Sáo pipeline now repaired

! East Coast gas market in transition ahead of LNG demand

! Fewer spot market opportunities in Western Australia

2011 2012 2013F 2014F 40

50

60

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Safety performance

! Fatality on Saxon CSG drilling rig 185 on 23 June 2013

─  Drilling operations immediately stopped on all rigs

─  Internal and external investigations conducted

─  Actions implemented and all rigs restarted within 6 weeks

! Record hours worked in 2013

! Lost time injury frequency rate of 0.6, 20% below 2012

! TRCFR of 3.8, compared to 5 in 2012

! Safety critical maintenance > 98% at operated sites

Lost time injury frequency rate of 0.6 per million hours worked


Safety performance (employees and contractors)

0

1

2

2007 2008 2009 2010 2011 2012 2013 YTD

0

10

20

30

40

50

Santos GLNG Bechtel and Saipem Lost time injury frequency rate (LTIFR)

Rate per million hours worked

Work hours (million)

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Principles of responsible operations

Increasing the confidence and trust of the communities in which we operate


Operating safely

Protecting the environment

Treating people with respect

Limiting our footprint

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2013 Investor Seminar Today’s agenda



Welcome and introduction David Knox

Strategy and LNG markets Peter Cleary

Business outlook Andrew Seaton

GLNG upstream Trevor Brown

GLNG downstream Rod Duke

Q&A followed by morning tea

Exploration Bill Ovenden

Drilling and Completions Diana Hoff

Eastern Australia Business Unit James Baulderstone

Asia Pacific Business Unit Martyn Eames

WA & NT Business Unit John Anderson

Wrap-up David Knox

Q&A followed by lunch

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Strategy and LNG markets

Peter Cleary Vice President Strategy & Corporate Development PETRONAS Putri class LNG tanker

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Our strategy

Growing our strong domestic base business

Delivering our transformational

LNG portfolio

Our vision is to be a leading energy company in Australia and Asia

Building a focused exploration-led

portfolio


ASIA LNG AUSTRALIA

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Global LNG demand and supply outlook

LNG continues to be a fast growing fuel


Source: Wood Mackenzie, LNG supply represents contracted volumes and potential contract roll-overs from operating and under construction projects.

0

100

200

300

400

500

600

2000 2005 2010 2015 2020 2025 2030

Atlantic

Qatar

Australia

Other Pacific

mtpa

160 mtpa

290 mtpa

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LNG Demand

! LNG delivers energy security

─  Buyers rely on the spot market or short term market to meet their LNG needs

─  Traditional buyers will continue to rely on LNG to deliver energy security; diversity of supply will remain a priority

Forecasts frequently underestimate actual LNG demand


2012 contracted LNG by source mtpa

-

20

40

60

80

100

Contracted LNG Demand Constracted LNG Demand

Qatar

Spot

Malaysia

Qatar

Brunei

Indonesia

Australia

Russia East

Other

Indonesia

Oman Malaysia Yemen Other

Spot

South Korea Japan

Total Contracted

Total Contracted

Source: Wood Mackenzie

Contracted LNG For

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Global LNG demand vs US LNG in 2025

! Constraints on US LNG exports

─  Buyer appetite for diversity of supply

─  Not all US LNG projects will secure financing

─  LNG plant constructions and labour constraints

─  Potential regulatory constraints on upstream gas supply

─  Regulatory approvals

US LNG alone will not fill the gap


Source: Wood Mackenzie, Contracted supply and contract rollovers are for operational and under construction plants, includes SPAs, MOUs, and HOAs

mtpa

0

100

200

300

400

500

2025 US LNG

160

300

US LNG ~40-60 mtpa

Contestable market

Contracted supply and contract rollovers

~100 mtpa

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US LNG pricing Portfolio players and trading houses dominate US LNG off-take with higher pricing


Sabine Pass LNG pricing - 2012

Spot

Portfolio player pricing terms for resale - 2013

0

2

4

6

8

10

12

14

16

2020 Forecast +15% HH Liquefaction Shipping (Assumed)

0

2

4

6

8

10

12

14

16

2020 Forecast +25% HH Liquefaction & Shipping

6-7

3

3

6-7 1.6

6.5

$14.6/mmBtu

$13.5/mmBtu

US$/mmBtu US$/mmBtu

Henry Hub Henry Hub

Source: PIRA, Poten & Partners, PFC Energy

1 1.6

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Santos’ unique LNG portfolio

Interests in four LNG projects with growth opportunities


Operating

Under construction

Darwin LNG expansion !   Government environmental

approval in place for up to 10 mtpa

PNG LNG expansion !   Owner of foundation

infrastructure

PNG LNG !   13.5% equity !   6.9 mtpa plant capacity !   6.6 mtpa contracted to 2034

Bonaparte LNG !   Targeting FEED in 1H 2014 !   Federal government

environmental approval received

GLNG !   30% equity (operated) !   7.8 mtpa plant capacity !   7.2 mtpa contracted to 2035

Darwin LNG !   11.5% equity !   3.7 mtpa plant capacity !   Fully contracted to 2023

Growth opportunities

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Strong Australian base Santos has a significant infrastructure footprint that provides development optionality


Santos assets

INFRASTRUCTURE:

FPSO

LNG

Gas Processing / Load out facility

Northern LNG

Carnarvon

Central Australia Southern

conventional

Eastern Australia

unconventional

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Liquids LNG Gas

Unconventional

Conventional

Asia

Australia

Strong diverse portfolio Delivering a balanced portfolio of 80-90 mmboe in 2020


2020 indicative production split

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Business outlook

Andrew Seaton Chief Financial Officer

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Strong business outlook

Clear production growth outlook

Growing margins

Robust funding position provides the capacity to fund execution of strategy

Committed to increasing returns to shareholders

Intent to review capital management options as PNG LNG production approaches

Operating cash flow is expected to double by 2016, providing the foundation for further growth and increased shareholder returns


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0

10

20

30

40

50

60

70

80

90

2013 2014 2015 2016 2017 2018 2019 2020

Production growth Delivering 80-90 mmboe of production by 2020 from already captured opportunities


Producing

Sanctioned

Near-term growth options

Santos production mmboe

Producing Aust: Cooper Basin, Carnarvon Basin,

Queensland CSG, offshore Victoria, Mereenie LNG: Darwin LNG Asia: Chim Sáo, Indonesia, SE Gobe

Near-term growth options Aust: Narrabri LNG: Bonaparte LNG Asia: Ande Ande Lumut

Sanctioned Aust: Cooper infill, Kipper LNG: PNG LNG, GLNG Asia: Dua, Peluang

Upside potential Aust: Cooper shale, Cooper tight gas, Zola,

Winchester, Amadeus, McArthur LNG: PNG LNG expansion, Darwin expansion,

Browse Asia: Vietnam, Indonesia CSG

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70%

Margin growth

Growing revenue per barrel

Growing margins from higher revenues and lower unit costs


35%

Increasingly oil price-linked

Rising domestic gas prices across Santos’ portfolio

! EA gas prices >$8/GJ for new contracts

! WA new generation gas pricing

! Indonesia domestic gas prices have doubled

Focus on cost control ! Cost pressures abating

! Fixed-cost businesses (i.e. Cooper) beneficiaries of increased activity and higher production volumes

! Procurement, logistics and construction strategies driving lower unit costs, with on average 15% reductions being realised

2012 2015

4.09 4.31 4.71 5.14 5.67

0

2

4

6

2009 2010 2011 2012 2013 YTD

Santos average realised gas price

$/GJ

Oil price-linked

Other

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Capex guidance

! 2014 guidance of $3.5 billion

(excluding capitalised interest)

─  GLNG $1.4 billion

─  PNG LNG $0.3 billion

─  Eastern Australia $1.1 billion

─  WA&NT $0.3 billion

─  Asia Pacific $0.1 billion

─  Exploration $0.3 billion

! 2014 capitalised interest forecast at approximately $0.25 billion

2013 is peak year for capex – guidance unchanged at $4 billion. 2014 guidance $3.5 billion


Capital expenditure (excludes capitalised interest)

0

1

2

3

4

2011 2012 2013F 2014F

A$billion

3.1 3.3

4.0 3.5

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Strong funding position $3.7 billion in balance sheet capacity to fund execution of business strategy and minimise financing risk. Minimal debt maturities to 2016


Available liquidity Debt maturity profile

A$billion

0

1

2

3

4

Cash Undrawn corporate

lines

Undrawn project line (PNG LNG)

ECA facilities

0

400

800

1,200

1,600

2,000

2013 2015 2017 2019 Beyond 2020

Undrawn bank facilities ECA

Euro subordinated notes Drawn facilities

A$million

Charts as at 31 October 2012

0.5

2.2

0.4

0.6

Notes mature in 2070, with Santos option to redeem in 2017

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GLNG upstream

Trevor Brown Vice President Queensland Drilling rig, Fairview field

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Strong GLNG project delivery in 2013

GLNG is 72% complete and on track for first LNG in 2015



! Drilling ahead of plan

! Fairview wells continue to produce strongly

! Roma pilot well data supporting predicted capacity

! First new wells at Fairview and Roma connected and dewatering

! Collaboration deals signed with QGC and APLNG

! Pipeline making excellent progress

! Marine crossing tunnel ahead of schedule

! Strong progress on Curtis Island

! On track for 2015 start-up

! Capital cost estimate unchanged For

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GLNG project summary The GLNG project is 72% complete and on track for first LNG in 2015


Location Queensland, Australia

Project participants

Santos (30% and operator), PETRONAS, Total and KOGAS

Project scope

§  Upstream CSG fields §  420 kilometre pipeline

§  2 train LNG plant

LNG plant capacity

7.8 mtpa of LNG; 7.2 mtpa has been sold to PETRONAS and KOGAS

Gross capital cost

estimate

US$18.5 billion1 from FID to the end of 2015 when the second train is expected

to be ready for start-up

LNG train ramp-up

Train 1 first LNG expected in 2015; LNG production expected to ramp-up over 3-6 months Train 2 first LNG expected 6-9 months after train 1; LNG production expected to ramp-up over 2-3 years

1 Based on foreign exchange rates which are consistent with the assumptions used at FID (A$/US$ 0.87 average over 2011-15).

GLNG acreage GLNG pipeline Comet Ridge to Wallumbilla pipeline Gas pipeline

Rockhampton

Fairview Hub 5

Curtis Island

GLNG plant

Gladstone

Rolleston

Fairview Hub 4

Roma Hub 2 Roma Wallumbilla

Wandoan

Injune

Bymount

Dalby

Toowoomba Ipswich Brisbane

Queensland

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GLNG upstream

! On track to drill over 230 wells in the GLNG acreage in 2013

─  224 wells drilled in the GLNG acreage year-to-date

─  Average 2013 drilling and completion costs of $1.35 million per development well

! First new development wells are on line and dewatering at Fairview and Roma

! Continued field development optimisation, including:

─  Additional development focused on Fairview infill, Eastern Flank and Roma

─  Third party gas purchases

─  Collaboration with upstream proponents

! Expect to drill ~300 wells over 2014-15

! Expect to drill 200-300 wells per annum post 2015

On track to drill over 230 wells in 2013. Continued focus on field development optimisation


Savannah 67 rig in Fairview field

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Fairview field development

! 170 wells are connected with a current capacity of 278 TJ/day

! First new development wells on line and dewatering in October 2013

! Average gas capacity per well building from 1.0 TJ/day in 2010 to 1.63 TJ/day in 2013

! Additional field development and optimisation activities are underway

─  Fairview Eastern flank: additional wells and gathering systems that utilise the existing capacity at Fairview Hub 4

─  Fairview infill: drilling of infill wells in the core Fairview development area

Fairview wells continue to produce strongly, with an average gas capacity of 1.63 TJ/day per well


Fairview well performance as at 1 October 2013

Optimum gas capacity (TJ/day)

Optimum water capacity (bbl/day)

Current average gas capacity 1.63 TJ/day

Current average water capacity 385 bbls/day F

or p

erso

nal u

se o

nly

Roma field development

! 34 appraisal pilot wells in Roma are now producing

─  Confirming the modelled type curves of average optimum gas capacity of 0.5 TJ/day

─  Developing operations experience of Walloons coal seam production

! First development wells on line and dewatering in November 2013; on schedule

! Additional Roma field development comprising more wells, gathering systems and surface facilities is being progressed

Roma pilot data supporting individual well capacity of 0.5 TJ/day. First wells have been connected to new facilities


0

500

1,000

1,500

2,000

2,500

3,000

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Roma well performance as at 1 October 2013

Optimum gas capacity (TJ/day)

Optimum water capacity (bbl/day)

Current average water capacity 450 bbls/day

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Nodal compressors and piperack, Fairview Hub 4

Fairview Hub 4 250 TJ/day capacity

Commissioning of the water processing facilities is underway. All nodal compressors, gas turbine alternators, switchrooms and control buildings are installed


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AWAF 3, Fairview Hub 5

Fairview Hub 5 170 TJ/day capacity

Commissioning of the associated water amendment facility (AWAF 3) has been completed


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Scrubbers and hub compressor, Roma Hub 2

Roma Hub 2 145 TJ/day capacity

First development wells have been connected and dewatering has commenced


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Upstream infrastructure

! Collaboration agreements signed between the GLNG and APLNG projects in October 2013 for gas swaps and infrastructure connections

─  Reduces the need for a total of 140 kilometres of additional pipelines, which lowers operating costs and minimises gas movements

─  Enables significant volumes of gas to flow bi-directionally between the projects

! Comet Ridge to Wallumbilla pipeline (CRWP) loop is in progress

─  Will increase the capacity of the existing pipeline to 910 TJ/day

─  Construction is expected to commence in early 2014

! Electrification of the three upstream hubs is underway

APLNG collaboration agreement has been signed. CRWP loop and electrification projects underway


GLNG acreage Other Santos acreage Gas pipeline

Bymount

Queensland

Injune

Roma Wallumbilla

Wandoan

Fairview Hub 05

Fairview Hub 04

Roma Hub 02

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GLNG Upstream Significant milestones achieved in 2013. GLNG remains on track for first LNG in 2015


Milestone Date

Over 200 wells spudded in 2013 October 2013

Collaboration agreement signed with APLNG October 2013

First wells connected to Fairview Hub 4 and dewatering October 2013

First wells connected to Roma Hub 2 and dewatering November 2013

First commissioning gas to LNG plant Mid-2014

First LNG Train 1 2015

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GLNG downstream

Rod Duke Vice President Downstream GLNG


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Gas transmission pipeline

! 420-kilometre gas pipeline construction progressing well:

─  Clearing and grading is complete

─  Stringing is complete

─  Automatic welding is complete on the mainland and Curtis Island

─  Over 365 kilometres of the pipeline has been buried

─  Rehabilitation complete for over 190 kilometres of the pipeline route

! Pre-commissioning is underway:

─  Over one-third of the pipeline has been cleaned and gauged

─  Hydrotesting has commenced

Remains on track for completion in Q2 2014, with pre-commissioning activities underway

Completion of the automatic welding on Curtis Island


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Marine crossing tunnel Over 3.7 kilometres of the 4.3 kilometre tunnel is complete, on track for Q1 2014 completion

Tunnel boring machine reception shaft, Curtis Island


Marine crossing tunnel

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October 2013


LNG plant site Significant construction progress over the past 12 months


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LNG plant modules

! 82 Train 1 modules required:

─  47 modules shipped to site

─  8 modules complete and ready for shipping

─  27 modules under construction

! 29 Train 2 modules required:

─  21 modules under construction

! Minimal impact to module yard and local community from Typhoon Haiyan

Over half of the Train 1 modules have been shipped from the module yard to Curtis Island

Propane condenser module ready for load-out in the Philippines


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October 2013

Train 1 site, Curtis Island

LNG trains Construction progressing well, with module installation underway


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October 2013

LNG tanks Good construction progress with both roofs raised, concrete roof pours complete and work underway on inner nickel steel tanks

Inside LNG Tank B


LNG Tank B roof concreting LNG Tank B and A

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LNG jetty, Curtis Island

LNG jetty Installation of jetty modules, loading arms and marine flare complete. Dredging complete. Pipe welding of trestle modules has commenced


October 2013

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! Dedicated Bechtel commissioning management team for GLNG plant

! LNG plant commissioning team will include GLNG operators

! Experienced GLNG partner secondees working in key commissioning and start-up coordination roles

! Downstream Operations team of 116 already recruited with training underway

Commissioning and Operations

Downstream operations training, July 2013


Teams recruited and commissioning plans in place

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Downstream collaboration

! Agreement signed with QGC to interconnect both projects’ pipelines

! Allows for gas to flow from one project to the other, enabling projects to buy, sell or swap gas

! Construction expected to be completed in 2014

QGC pipeline interconnection agreement signed; construction to commence in 2014. Further areas for collaboration are being explored

Signing of the interconnection agreement, July 2013


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GLNG downstream Significant milestones achieved in 2013; GLNG remains on track for first LNG in 2015


Milestone Date

Marine crossing tunnelling commenced April 2013

First LNG tank roof raise completed June 2013

Second LNG tank roof raise completed September 2013

Dredging complete September 2013

Pipeline clearing and grading complete October 2013

Hydrotesting of pipeline commenced October 2013

Marine crossing tunnelling complete Q1 2014

Pipeline completion Q2 2014

First commissioning gas to LNG plant Mid-2014

First LNG Train 1 2015

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Exploration

Bill Ovenden Head of Exploration Crown-1ST1

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Strong track record

! Consistent, material resource and reserve additions over past decade

! Significant capabilities across diverse range of exploration assets have delivered large volumes

! Recent resource additions from other unconventionals

! Peer leading finding costs

Santos’ exploration team has consistently delivered material resource additions


Pre-drill exploration opportunities

2C discovered resources

2P reserves

Fairview

Roma

Spar

Cooper oil

Crown

Wortel & Oyong

Bassett-West

Barossa-Caldita

Basin centred gas

Gunnedah

Dua

Mutineer-Exeter

Fletcher-Finucane

McArthur basin

Browse basin

Papuan basin

Lasseter

Hides deep

Ceduna basin

Carnarvon

Cooper unconven-

tionals

Phu Khanh basin

Zola/ Bianchi

Chim Sao

Reindeer

PEL238

Concerto extension

Winchester

Asia

W

A&N

T Ea

ster

n Au

stra

lia

Bengal basin

EA CSG opportunities

Nam Con Son basin

Papuan basin Nam Con

Son basin

Grand

Deep coal

REM

1P Finding costs, 2008-2012 USD/boe1

7.95

2.50

Santos Peer average

Amadeus

Bonaparte

1 HIS Herold database, E&P players with Australasian-Asian presence

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Exploration strategy

Strengthen position in focus super basins

Targeted entry to frontier basins

Develop leading Australian unconventional position

Leverage existing position and capabilities

The Santos exploration strategy delivers options to underpin long term organic growth


Focus super basins

Frontier basins

2014 exploration drilling

2014 seismic acquisition

Unconventional basins

Strategic geographic focus

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Santos acreage Gas field Oil field Gas pipeline Oil pipeline

Devil Creek

Western Australia

Karratha

Dampier

Stag

Varanus Island

Thevenard Island

Onslow

Carnarvon Basin Bianchi and Winchester discoveries build on recent success with further upside potential, proximal to infrastructure


Bianchi gas discovery builds on success at Zola

PSTM Near Stack

PSTM Far Stack

Winchester gas discovery with additional upside within deeper structure

Reindeer Winchester

Pluto

Barrow Island East Spar

John Brookes

Spar

Gorgon

Io

Zola Bianchi

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Browse Basin

! 2013 program ─  Basset West-1 discovery

─  Dufresne-1 P&A ─  Crown – integration of data

from nearby wells

─  Multi-client Caswell 3D

! 2014 program ─  Lasseter drill

─  Multi-client Caswell 3D

! Resource consolidation ─  Concerto and Ichthys extension

into WA-274-P

─  Greater Crown/Treasury

─  Burnside appraisal

─  Grand prospect

! Multiple commercialisation options

World class resources and prospect inventory. Lasseter prospect to be drilled in Q2 2014


Northern Territory

Western Australia

Poseidon discovery Crown

discovery

Dufresne (P&A)

Bassett West discovery

Proteus discovery Lasseter

(2014) Grand

prospect

Treasury Concerto extension

Depth structure map, Near Top Lower Vulcan reservoir

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Browse Basin

! Santos is operator with 30% equity interest, partners are Chevron and Inpex

! Multi target prospect in WA-274-P, with significant downdip extension into WA-281-P (Santos 48% equity)

! Located on prominent Crown-Treasury and Ichthys field structural trend

! Adjacent to a large late Jurassic graben (liquids rich local source)

Lasseter is an exciting prospect in the heart of the Browse, with drilling planned for Q2 2014


Lasseter

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PNG and West Papua exploration

! 2013 program

─  Farm-in to Talisman-operated Foreland acreage (subject to government approval)

─  Drill Kupio-1 (P&A)

─  PRL 38 (Pandora) application

─  Drill Manta-1 (in progress)

! 2014 program

─  NW Koko (oil and gas)

─  Warim seismic

─  PPL 287 seismic

─  Hides Deep

Renewed focus on exploration in the Papuan Basin, farm-in to four exploration licences in 2013, drilling and seismic planned for 2014, Warim reactivated

Santos acreage and activity in PNG and West Papua

INVESTOR DAY BRIEFING 53 |

Warim PSC

PPL 261

PPL 426

PPL 287 PRL 9

PDL 3

PDL 1


Hides

SE Gobe

Barikewa

PRL 38

Port Moresby

Papua New Guinea

West Papua

Planned seismic

2014 exploration wells

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Offshore South Australia

! Access to a large frontier basin

─  16,600 km2 block with water depths from 200 to 3,000 metres

─  Santos holds a 50% interest with Murphy Oil holding 50% and operator

! High exposure to liquids

─  Multiple plays within a major unexplored delta province

─  2D/3D seismic commitment in initial 3-year phase

! Basin to be de-risked by adjacent operators' wells

Gazettal capture of a 50% interest in EPP 43 in the offshore Ceduna Basin in October 2013

Ceduna Basin, offshore South Australia


EPP 43 EPP 37

EPP 38 EPP 39

S 12-2

EPP 40 S 12-3

Ceduna

Port Lincoln

Santos acreage Chevron acreage BP acreage

Oil prone source rocks from sea floor sampling

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Mount Isa Tennant Creek

Darwin

Alice Springs

Moomba Plant

Gladstone

Brisbane

Wallumbilla Ballera Plant

Australian shale Cooper and McArthur Basins have some key technical attributes comparable to successful US shale basins


Organic matter TOC wt%

Mineralogy Non-clay content %

Hydrocarbon content mmboe/km2

Gas Liquids Source: EIA 2011, Warren et al 1998, Ryder Scott

McArthur Basin

Cooper Basin

Eagle Ford

Barnett

McArthur

Cooper

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McArthur Basin Large footprint in the heart of the McArthur Basin – unconventional oil and gas potential with scale


Santos permits

2013 2D lines

5 KM

Santos EP-‐161 permit Beetaloo sub-‐basin 2D seismic example

Kyalla Fm (Shale)

Velkerri Fm (Shale)

MCSAN13-‐04 MC92-‐104

! Material acreage position exposes Santos to upside

! Drilling planned for 2014

! Promising results from initial seismic

─  Highly prospective Beetaloo sub-basin stratigraphy extends and expands into Santos acreage

─  Favourable geology setting and optimal depths for primary Velkerri play

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2014 exploration schedule Delivers on our exploration strategy across super basins, frontier basins and unconventional basins


1 Subject to Government approval

Well Name Basin / Area Target Santos Interest % Timing

Manta-1 PNG Gas 30 Drilling

South Sumatra CSG wells Sumatra CSG 60 H1 2014

Mt Kitty Amadeus Gas 100 Q1 2014

NW Koko-1 PNG Oil / gas 30 Q1 2014

Vanuatu-1 Carnarvon Oil 37.5 Q1 2014

Lasseter-1 Browse Gas 30 Q2 2014

Hon Khoai-1 Nam Con Son Oil 451 Q2-3 2014

Davis-1 Carnarvon Gas 45 2H 2014

McArthur unconventional wells McArthur Shale oil / gas 50 Q3 2014

Hides Deep PNG Gas 24 Q4 2014

The exploration portfolio is continuously being optimised, therefore the above program may vary as a result of farmout, rig availability, drilling outcomes and maturation of new prospects

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Drilling and Completions Diana Hoff Vice President Technical and Engineering Roswell-2 horizontal shale well

30” Conductor

8-1/2” Production hole

5-1/2” Production casing

+/-3800ft

17-1/2” Surface hole

13-3/8” Surface casing

12-1/4” Intermediate hole

9-5/8” Intermediate casing

KOP: +/-7,000ft

+/-8,700ft TVD +/-11,000ft MD

+/-8,700ft TVD +/-9,900ft MD

EOB: TD: 1,700ft of lateral in pay zone 5 stage plug and perf frac

Image not to scale

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Drilling and completions

! 309 operated wells drilled year-to-date, including:

─  224 GLNG wells

─  68 Cooper Basin wells

─  All 8 South Sumatra CSG exploration wells completed with zero recordable EHS incidents and on budget

! Over 50 minimal disturbance lease pads delivered in GLNG acreage in 2013 year-to-date, with lease construction costs 50% lower

! Cooper Basin Cowralli 16-well pad drilling campaign completed with significant time and cost efficiencies

On track to deliver over 330 wells for 2013


EWG102 drilling rig, Fairview

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GLNG drilling and completions

! Over 30% reduction in drilling and completion costs per well since FID in January 2011

─  Average 2013 drilling and completion cost of $1.35 million per development well

! Average 2013 drilling and completion times of 13 days per well

! Significant time and cost efficiencies continue to be achieved as a result of:

─  Reduction in well types to four core designs

─  Factory drilling approach, from well scouting through to completion

Continued time and cost efficiencies achieved in 2013, with 224 wells drilled year-to-date


2.05 1.81

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GLNG drilling and completions

! Lease construction costs have reduced by over 50% due to: ─  Reduction in field construction

time from 14 days to 3 days

─  Elimination of individual well pad engineering planning and certification activity

─  Consolidated approvals process (including scouting and approvals)

! Minimal disturbance leases reduce site footprint by over 40% ─  Minimal cut and fill activity

required

─  Reusable high density polyethylene matting used

─  Temporary fencing and fluids storage

Over 50 minimal disturbance lease pads have been delivered in 2013; driving down lease construction costs and reducing our site footprint

Single well pad in Roma immediately after the rig and matting has been removed


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Cowralli multi-well pad, Cooper Basin

Comprising 16 wells across two pads, 10,500 foot s-curve drills and 5 frac stages per well

Aerial view of Cowralli, October 2013


Spider plot of Cowralli wells

! Longest step-out of 2,928 feet

! Record Polycrystalline Diamond Compact (PDC) drill bit run of 9,435 feet – saving 3 days

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Cowralli multi-well pad, Cooper Basin

Cowralli multi-well pad drilling completed in October 2013 with significant time and cost efficiencies achieved:

! 32% reduction in average drilling and fracture stimulation costs over campaign, compared to Cooper Basin historical average

! Land disturbance reduced by over 50%

! Over 1,200 double road train loads avoided

! Individual well delivery reduced from 34 days to 16 days (final 5 well average)

! Achieved 72 frac stages across 18 full operational days, averaging 4.3 stages per day

─  Cost performance is significantly under budget and under historical averages

─  Significant time efficiencies achieved over 16 wells (40% reduction in time)

Key technical and operational learnings to be utilised in upcoming multi-well development campaigns

Multi-well pads deliver greater efficiency, lower costs and a smaller environmental footprint


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Cooper Basin horizontal shale program

! Roseneath formation shale target

─  1,700ft lateral length

─  5 horizontal fracture stimulation stages planned

─  Utilising micro-seismic fracture diagnostics in adjacent Roswell-1 vertical well

Roswell-2: Santos’ first horizontal REM shale well. Continuing to define an optimal well and frac design to deliver maximum rate and recovery at lowest cost


30” Conductor

8-1/2” Production hole

5-1/2” Production casing

+/-3800ft

17-1/2” Surface hole

13-3/8” Surface casing

12-1/4” Intermediate hole

9-5/8” Intermediate casing

KOP: +/-7,000ft

+/-8,700ft TVD +/-11,000ft MD

+/-8,700ft TVD +/-9,900ft MD

EOB: TD:

1,700ft of lateral in pay zone 5 stage plug and perf frac

Image not to scale

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Eastern Australia Business Unit

James Baulderstone Vice President Eastern Australia Drilling rig, Narrabri gas project

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Eastern Australia market opportunity

! East coast gas demand to triple leading to higher prices

! Santos responding by building gas capacity in the Cooper to meet 2015+ period

! NSW natural gas critical to east coast energy security

Santos ideally placed to leverage value from its portfolio of resources and infrastructure


! Sustained production and margin growth

! Increasing profit from third party crude oil

! Opportunity large and being unlocked by market demand

! 2013 program providing key information for future development

Gas demand driving growth

Unconventional gas the next

frontier

Cooper Basin oil delivering

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Eastern Australia gas market transformation

! Tripling of gas demand creating market tightness

! Recent east coast gas contracts >$8/GJ

! New sources of gas required in 2015-2020 to meet supply challenge

Additional supply is required to meet increased demand and Santos well placed to benefit


! Santos accelerating Cooper Basin supply

! Poised to develop Narrabri Gas Project

! Encouraging further unconventional exploration

! Increasing infrastructure, transport and processing capability

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2013 2015 2017 2019 2021 2023 2025

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GLNG

QCLNG

Power Gen

Retail, C&I

Eastern Australia gas demand (PJ)

x3

EABU asset footprint

Cooper

Otway Gippsland

Gunnedah

Surat/Bowen

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Santos well placed to meet growing demand

Cooper Basin legacy infrastructure and existing resource base provides great competitive advantages


! Cooper Basin gas production capacity has turned the corner after a decade of decline

! Growing 2013 production capacity >10%

! On track to grow production capacity by 30% by 2015 to meet new LNG and domestic contracts

! Cooper Basin has material uncontracted volumes post 2017

! Higher gas prices encouraging exploration to unlock more resources

5,130 PJ

5,130 PJ

5,130 PJ

2007

700

650

600

550

500

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Increasing Cooper Basin gas production

Targeting three key areas during 2014 – 2016 enabling cost efficiencies from increased scale


Innamincka

Ballera

Jackson

Moomba


! 2 rig, pad development focus

! High deliverability

! ~70 wells

Moomba Big Lake

SWQ Unit

Western Flank

! Extending infrastructure to commercialise resource

! ~50 wells

! High liquids, high value program

! Includes Drillsearch farm-in

! ~100 wells

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Operational efficiencies unlocking value

! Increasing reliability driving improvement to downtime

! Increased scheduled downtime in 2014, in readiness for 2015 supply

Improved reliability, production optimisation and drilling improvements leading to higher margins


! Reducing unit costs to <$10/boe by 2015

! Utilisation of infrastructure upgrades and automation technology

! Increasing mix of multi-well pad drilling efficiency

! On track to achieve a 25% reduction in well costs by 2015

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Cooper infrastructure expansion

! Site works commenced for ~22,000 HP compression at 3 key satellites, with Big Lake due for commissioning in November 2014

! New raw and fuel gas trunkline designs well progressed

! New CO2 train 8 on track for commissioning mid-2016

! New Moomba APA-owned export compression on track for mid-2014 start-up

! Stage 2 expansion subject to future growth opportunities

Stage 1 infrastructure upgrades on track to meet production growth targets - taking Moomba average processing capacity to ~420 TJ/day sales gas


Infield compression

Moomba gas plant and

export compression

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Narrabri Gas Project progressed during 2013

Leewood water treatment plant

! Largely completed remediation of legacy issues and rehabilitation program

! State of art water treatment facilities under construction

! 110 individual community consultation events

Strong Narrabri stakeholder support enabling recommencement of activity

Leewood water treatment plant


Appraisal program

! 16 well appraisal program now underway

! First corehole complete showing good coal thickness with gas-desorption testing underway

! First of 15 pilot wells currently being drilled

! Field development planning and sub-surface modelling in progress

Drilling rig, Narrabri gas project

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Narrabri Gas Project go forward

2014 program aiming to be in a position to deliver first gas in 2017


! Landholder agreements and local investment

! Job creation peaking at 1,200

! Attractive community compensation package

Community

Upstream

NSW energy benefits

! 200 TJ/day field development

! Minimal footprint in Pilliga (<1%)

! 180km pipeline connecting into the Moomba to Sydney pipeline

! Supplying >50% NSW gas needs

! Underpinning NSW manufacturing industry

! Material royalties to NSW State Government

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Cooper Basin unconventional opportunity

Market demand accelerating the commercialisation of three potential multi tcf plays in the Basin


! Regionally extensive over-pressured gas system

! Heterogeneous stacked tight fluvial sands

BCG tight sands

Shale

Deep coal

! Over-pressured gas system

! Tight formations requiring fracture stimulation

! Porous coals, over-saturated with free gas

! Thick and regionally extensive

! Similar reservoir quality to successful U.S. plays

Innamincka

Fly Lake 17

Moomba 77 Dorodillo 2 Moomba

Big Lake 54 Big Lake 79ST1

Roswell 1 Roswell 2H

Van Der Waals 1

Moomba 195H Moomba 194

Langmuir 1

Gaschnitz 1

Moomba 193H

Moomba 192

Tirrawarra South 1

Santos Exploration permit Santos Production licence Gas field

Basin Centred Gas Shale Gas Play Deep Coal Play

Cooper Basin, South Australia

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Cooper unconventional results

Important milestones have been met during 2013, and 2014 program designed around key learnings


2013 program achievements

Basin Centred Gas

!  Proven play with large resource, +1,000 metre gas saturated section

!  Gaschnitz-1 area encouraging with good sand development and fraccability

Shale

!  Moomba-191 continues strong flow rate ~1.9 mmscf/day

!  Moomba-194 five stage frac currently awaiting flowback

!  Currently drilling horizontal section Roswell-2H

Deep coal !  Innovative stimulation approach

delivering flow rates per frac stage of

~0.3 mmscf/day

Play Program milestones Progress

Basin Centred Gas

Drill Gaschnitz-1

Drill Van der Waals-1

Drill Langmuir-1

Gaschnitz-1 muti-stage frac and flow test

Gaschnitz pilot 3D seismic survey

Van der Waals-1 and Langmuir-1 muti-stage frac and flow test

Shale

Drill and multi-frac Moomba-192 and Moomba-194

Drill Roswell-2H

Drill Moomba-193H Q1 2014

Drill Moomba-195H Pending results

Frac and flow test horizontal wells with microseismic fracture monitoring 1H 2014

Deep coal

Drill and frac Roswell-1

5 in-wellbore projects

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High value Cooper oil business

! 100% reserve replacement for three consecutive years

! Netback >$70 per barrel

! ~16 million 2P undeveloped reserve dominated by five key fields (Cuisinier, Charo, Zeus, Ipundu and Mulberry)

! Active exploration, including horizontal well pilot program

! 60% increase in profit generated by processing third party volumes in 2013

Maximising production and margin


Cooper Basin crude oil sales

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Eastern Australia 2015 transformation

! Recent contracts signed at ~$8/GJ

! Cooper gas and Narrabri Gas Project well positioned to supply into this market

! Existing infrastructure positions enable early commercialisation

! Large potential resource plays being accelerated by increasing gas demand

! Key plays being unlocked via innovative application of technology

! Strong production growth providing solid cash flows with further upside

Santos positioned to capitalise on strong market demand


New gas supply sources critical

Unconventional gas the next

frontier

Cooper Basin oil delivering

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Asia Pacific

Martyn Eames Vice President Asia Pacific PNG LNG plant site, near Port Moresby

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Strategic importance of Asian business

Building a high-margin business in Asia with a focus on three core countries


! Foundation owner in PNG LNG project

! Growing exploration portfolio

! 10 years operating experience, with national management and 250 staff based in Jakarta

! Acreage positions in four basins

! Foundation project owner in Chim Sáo

! Acreage positions in two basins

! PNG LNG over 90% complete and on track for first LNG in 2H 2014

! Well positioned for PNG LNG expansion

! Acquisition of exploration permits in Western Province of PNG

Our position Unlocking scale in 2013

! Acquisition of Ande Ande Lumut oil field

! Development of Peluang

! Promising results from South Sumatra CSG drilling

! Dua oil project over 65% complete and on track for first oil in mid-2014

! Drilling of Hon Khoai exploration well in mid-2014

Vietnam

Indonesia

PNG

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PNG LNG project Over 90% complete and on track for first LNG in 2H 2014

Hides Gas Conditioning Plant


Location Papua New Guinea

Project participants

Santos 13.5%, ExxonMobil, Oil Search, NPCP, JX Nippon, MRDC, Petromin PNG

Project scope ! Upstream gas and condensate fields

! Gas transmission pipeline

! 2-train LNG plant

LNG plant capacity

6.9 mtpa, sold to: CPC (1.2 mtpa) Osaka Gas (1.5 mtpa) Sinopec (2.1 mtpa) TEPCO (1.8 mtpa)

Gross capital cost estimate

US$19 billion

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Hides Gas Conditioning Plant

PNG LNG project Significant milestones achieved in 2013, with commissioning activities well underway


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PNG LNG potential expansion

Multiple options for potential expansion of foundation 2-train project

! Hides 3P potential within base project

! Hides Deep (Santos 24%)

─  Exploration prospect beneath the existing Hides field

─  Constrained anticline approximately 700 metres below the proven Toro reservoir

─  Drilling approach and timing currently being considered

! Utilise ownership in foundation project for other sources of gas

─  PRL 3 (P’nyang)

─  PRL 15 (Elk/Antelope)

! Longer term exploration potential in Western Province

Existing infrastructure can support potential future expansion. As an owner of the foundation project infrastructure, Santos is well placed


PNG LNG plant

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Indonesian domestic gas Strong base business in East Java underpinned by rising prices


Peluang wellhead platform

! 13% of Santos’ current gas production is from Oyong, Wortel and Maleo

─  Weighted gas price has doubled to ~US$5/mmbtu

! Peluang gas project is over 45% complete and on track for first gas in 1H 2014

─  Expected average gross production rate of 25 mmscf/day

! Encouraging results from South Sumatra CSG

─  Initial 8-well drilling campaign complete including 4 pilot wells due on stream before year-end 2013

─  Initial well results in line with expectation

─  Dynamic data available 1H 2014

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Indonesia oil

! Leverage Santos’ core skills in Indonesia and in offshore, shallow water developments

! Proposed development plan:

─  Installation of a wellhead platform and a permanently moored FPSO

─  Drilling of horizontal development wells

! Work underway targeting a final investment decision in 2014

─  Project team in place following government approvals and transaction closure in November

─  Early focus on FPSO tender process and detailed field development planning

Acquisition of a 50% operated interest in Ande Ande Lumut oil field, with Indonesian government approvals received in November 2013


Northwest Natuna PSC

Malaysia

Vietnam

Indonesia


Ande Ande Lumut, Northwest Natuna PSC

Ande Ande Lumut

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Vietnam oil Building our high-margin oil business with Dua development over 65% complete


! Chim Sáo

─  Full oil and gas production resumed following repair of damaged gas export pipeline

─  Gross oil production expected to continue into 2014 above 25,000 bbls/day

! Dua

─  Over 65% complete and on track for first oil in mid-2014

─  Average gross production rate of 8,000 bbl/day for first 12 months

─  Development drilling to commence in December

! Block 13/03

─  Farm-out of 20% equity interest to Murphy Oil in October 2013

─  Hon Khoai exploration well planned for mid-2014

Phnom Penh

Cambodia

Northwest Natuna PSC

Vietnam

Nam Con Son Basin

Ho Chi Minh City

Chim Sáo Dua

Block 13/03 PSC


Nam Con Son Basin, Vietnam

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Asia Pacific Business Unit Building a high-margin business in Asia with a focus on three core countries


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Asia Pacific EBITDAX (excluding asset sales)

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Vietnam

Indonesia

PNG

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Western Australia and Northern Territory

John Anderson Vice President WA & NT Fletcher Finucane oil project

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WA & NT Business Unit

! Deliver new high margin oil opportunities

! Build inventory of near-infrastructure oil opportunities

! Leverage legacy gas contract roll-off and delays to third party gas supply

! Control costs during period of rising revenues

! Maintain high margin business

! Target high quality LNG opportunities through partnerships and collaboration

Three business themes delivering high margins with significant growth options


Carnarvon oil

Northern LNG

Domestic gas

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Carnarvon oil Fletcher Finucane adds to high margin oil production. Building incremental oil opportunities


Target Delivery

First oil by 2H 2013 Ahead of schedule

$490 million gross capex Under budget by $20 million

Average 15,000 bbls/day for first 12 months

Expected average above 15,000 bbls/day

Opportunity Target

Near field exploration opportunities close to existing infrastructure Vanuatu well to be drilled Q1 2014

Mutineer-Exeter workovers 3 workovers in 2H 2014

Stag reliability and infill opportunities Access to incremental reserves and field life extension

Fletcher Finucane

Build inventory of opportunities

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Carnarvon domestic gas Santos is the third-largest domestic gas supplier in Western Australia with further margin potential


Santos position

A market leader !  In two of four gas hubs (at uniform equity level of 45%)

!  Large uncontracted reserves

!  High quality customer base

Leverage legacy contract roll-off

!  Santos average weighted gas price expected to increase by >50%

over next five years

!  Opportunity to capture third party gas contract roll-off

Leverage delays to third party gas supply

!  Spare capacity and reserves ready to meet material volume of gas demand

in event of third party supply delays

Control costs (relative to increasing revenues)

!  Operating cost increases have been contained to <3% per year

over the past 2 years, despite Western Australian cost pressures

!  Operator focused on operating cost control

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Focused Carnarvon Basin gas exploration

Bianchi and Winchester discoveries located near key infrastructure. Davis-1 well targeting additional resource additions


Bianchi - material extension to Zola, allowing aggregation of resource for development options

Winchester - strategically located near multiple brownfield tie-back routes

Winchester discovery

Bianchi discovery

Davis-1

Zola discovery F

or p

erso

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nly

Bayu-Undan / Darwin LNG

! Maintain high margin asset

─  FID on Phase 3 offshore drilling program

─  35-40 day major shutdown scheduled for Q3 2014

! Backfill and expansion:

─  Government approval for 10 mtpa and land available for Train 2 expansion

─  Multiple feed gas options available, including Santos’ Caldita Barossa and Browse resources

─  Cost effective brownfield development options with quicker execution schedule

Strong production in 2013. Progress on Phase 3 drilling program. Multiple feed gas options for backfill and expansion emerging


Site for laydown and flare expansion

Site for LNG tanks and laydown

Site for new LNG trains

Darwin LNG plant

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Browse Basin

! Significant resource build across the basin ─  Increase in Crown resource

through integration of nearby wells

─  Concerto and Ichthys field extensions into WA-274-P

─  Bassett West gas discovery

─  Lasseter-1 planned to spud Q2 2014, with potential southern extension into WA-281-P

! Multiple commercialisation options ─  Brownfield expansion/backfill of

existing projects

─  Standalone FLNG

─  Opportunity for upstream and downstream collaboration

Material resource build to support multiple commercialisation options including collaboration with adjacent resource owners for brownfield expansion


Crown discovery

Grand prospect Bassett West discovery

Lasseter prospect

Dufresne-1 P&A

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Caldita Barossa

! Partnership with ConocoPhillips and SK E&S with joint venture funding of up to US$520 million in appraisal drilling, pre-FEED, FEED and milestone payments

! Concept evaluation completed

─  Darwin LNG backfill and expansion

─  Floating LNG

! Three well Barossa appraisal program to commence Q1 2014

─  Crestal well

─  Updip well from Lynedoch-2 to test reservoir extent for resource upside

─  Northern extension to give structural control and test reservoir extent for resource upside

! Pre-FEED studies expected to commence in 2015

Concept evaluation completed for three well carried appraisal program commencing Q1 2014


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Bonaparte LNG

! Development of Petrel, Tern and Frigate fields, located 250km west of Darwin

! Floating LNG capacity target 2.4mtpa

! Federal Government Environmental Approval received

! Competitive concept definition completed with Technip and KBR

─  Consortia FEED/EPCIC bids being evaluated

─  Technip/Daewoo and KBR/HHI

─  Significant front-end loading

! Targeting FEED entry in 1H 2014 and FID in 2015

Competitive concept definition has been completed with consortia FEED bids under evaluation. FEED targeted for 1H 2014

Bonaparte LNG proposed development


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WA & NT Business Unit Three business themes delivering high margins


368 369 384

423 423

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WA & NT EBITDAX (excluding asset sales)

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Carnarvon oil

Northern LNG

Domestic gas

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4 December 2013

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Head Office Adelaide

Ground Floor, Santos Centre 60 Flinders Street Adelaide, South Australia 5000 GPO Box 2455 Adelaide, South Australia 5001 Telephone: +61 8 8116 5000

Useful email contacts

Share register enquiries: [email protected]

Investor enquiries: [email protected]

Website: www.santos.com

Contact information


Fletcher Finucane, Carnarvon Basin

Andrew Nairn

Group Executive Investor Relations Direct: + 61 8 8116 5314 Email: [email protected]

Andrew Hay

Manager Investor Relations Direct: + 61 8 8116 7722 Email: [email protected]

Nicole Walker

Investor Relations Manager Direct: + 61 8 8116 5302 Email: [email protected]

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adelaide south australia 5000 adelaide south australia 5001 for ... · 04-12-2013 · in 2h 2014 !...

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